+1. The smaller piston areas will give less rear brake shoe pressure for the same pedal force. The front will remain the same. This will have several effects, including
slightly less overall braking force at the same pedal pressure (normal load)
a small shift in proportional braking to the front brakes
better overall stopping with a rear-load (trunk full, trailer towing, etc.)
longer rear shoe life with shorter front brake life
Ford used shoe width, shoe diameter, and wheel cylinder sizing to accomplish the same function as a proportioning valve. Unless changing for a specific purpose, I'd say it's generally best to leave it as-is.
I have a Scarebird to put on the front, so if one would work better is a disc/drum setup that's the one I'd want. Plus, for some reason, the 7/8" cost $7 more then the 31/32" at Autophony and O'really's.
The big one. You are likely increasing your front braking power, and therefore the rears should as well. Whether you had the big ones before or not, they'd be the ones to have. The little ones are more expensive as they're less common, and you can use little ones to make big ones, but if a little one is pitted or scored too far oversize it's either junk to them or is sleeved at higher expense.